- The Dividend Aristocrats lost 5.67% in September and lagged the broader S&P 500 by 1.02%.
- The Dividend Aristocrats are a select group of currently 65 S&P 500 stocks with 25+ years of consecutive dividend increases.
- By showing the recent performance of the Dividend Aristocrats, some active dividend growth investors may be able to identify relative bargains.
For the full third quarter, the S&P 500 gained 0.58% climbing to 15.92% year to date. However, the S&P 500 (SPY) dropped -4.65% due to inflation fears and an ongoing Congressional budget impasse. Chinese property giant Evergrande’s debt issues did impact the global stock market. The S&P 500 index closed significantly lower after seven straight months with a gain. This drop is the worst one since the COVID-19 drop in March last year.
However, the September negative return is in line with the historical performance of the S&P 500, as you can see in the chart below.
The S&P 500 Dividend Aristocrats Index (NOBL) dropped a bit more than the S&P 500, -5.67% in September and is up 12.77% for the year. The Dividend Aristocrat Index is trailing the S&P 500 now by 315bp year to date.
The tech sector has been the main sector that drove under/overperformance for the Dividend Aristocrats versus the broad market. While the S&P 500 has a 27.9% weight to the tech sector, the weight in the dividend aristocrats index is just 3%.
The Dividend Aristocrats Index clearly didn’t benefit in the third quarter from its tech underweight and Industrials/Materials overweight. The IT sector contributed most to the S&P 500 Q3 gain, while the Industrials were on the other side of the spectrum.
Historical Performance
The current 10-years annualized return is 15.54% for the Dividend Aristocrats (NOBL) versus 16.63% for the S&P 500.
Good to keep in mind that over a time period of 30 years and multiple recessions, the dividend aristocrats strategy has outperformed the S&P 500 by nearly 2% per year.
The current dividend yield is 2.28% well above the 1.37% for the S&P 500 index.
Dividend Aristocrats performance in September 2021
Gains for the Dividend Aristocrats were mixed in the month of September with only 5 constituents with positive returns and 60 constituents with negative returns.
The table below lists all 65 constituents, including the three 2021 dividend aristocrats IBM, NextEra Energy & West Pharmaceutical Services, sorted by indicated dividend yield and lists price returns over trailing last month, 3-, 6-, and 12-month periods.
The above-presented performance and earnings data on the Dividend Aristocrats could assist active dividend growth investors to find some bargains for the long run.
Other Sources of Dividend Investment Ideas
The Dividend Aristocrats list is not the only way to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
- The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market on the long-term.
- Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
- For the European focused investors there is also the list of European Dividend Aristocrats.
- Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
- 100+ years of dividend, the list of stocks that pay over 100 year of dividend can be an list of inspiration.
Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.
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